The British Forces Broadcasting Service, for years a lifeline for members of the armed forces and their families, is to be put out to tender to competitive bidders, the Guardian has learned.

The decision, part of attempts by the Ministry of Defence to make savings, has raised concerns that large military contractors with no experience of objective news reporting or radio and television production could bid to run the service as a money-making scheme. Critics of the decision expressed concern that the values and ethos of the broadcasting station would be lost.

Contractors thought to be interested in bidding include Babcock, Serco and BT. The MoD, after lengthy internal debate, is due to publish a statement of its broadcasting requirements soon, say BFBS sources, opening up its services to external suppliers for the first time since it began in 1943.

The MoD said that the service would be put out to tender shortly, with the successful bidder taking over in 2013.

Further cuts are expected in an already reduced budget, currently about £20m a year. In effect BFBS, which employs a 30-strong independent news team, faces dismemberment, taken over in some places by local garrison radios.

A charitable trust, the Services Sound & Vision Corporation, currently receives the funds from the government and the money is then used by BFBS. Any surplus is used for events such as live concerts or reinvested in charities helping armed forces personnel.

The BFBS has a tradition of standing apart from government publicity agencies and PR machines. Though supportive of the armed forces it aims to provide credible and unbiased news from teams of dedicated reporters.

It is assisted by news footage from the BBC and, more recently, Sky News. But sources say there are always tensions and disputes between it and the MoD. One current area of friction is said to be the focus on a lack of accommodation for naval families. The MoD is also believed to be unhappy with the coverage of the rapid decommissioning of military planes, ships and hardware in the recent defence review.

BFBS services centre on the main theatres of war and deployments, notably Afghanistan and the Falklands. It has journalists permanently stationed at Camp Bastion, the main British base in Helmand, south Afghanistan.

It broadcasts to British troops in Germany, where it was established in 1945. Under the current defence review the 20,000 British troops there will be withdrawn by 2020.

The main show is a half-hour TV news programme at 5.30pm. There are also rebroadcasts of the Today programme and PM on radio. BFBS broadcasts 10 British TV channels, all overseas, with an emphasis on such topics as welfare for military families and accommodation.

In addition BFBS runs 400 live entertainment shows every year, with visiting British entertainers, and runs programmes in Cyprus that soldiers attend after ending a tour of duty before returning home.

BFBS manages cinemas in Germany, shops on military bases and an archive so soldiers can download favourite programmes, such as Top Gear, before going to the front. Teams of technicians go to the forward bases to ensure the services are available to troops.

BFBS calling

British forces radio has its roots in north Africa during the second world war, when the British army in Algiers set up an experimental radio station in a harem. After the war it moved to Hamburg.

One of its most celebrated programmes was Two-Way Family Favourites, playing records requested by troops based in Germany and their families in the UK. Anchored by Cliff Michelmore and Jean Metcalfe, who later married, it was later broadcast by BBC Radio's Light Programme.

BFBS says its studios have "looked out over Victoria Harbour from Hong Kong Island, Basra air station in Iraq, the Banja Luka metal factory in Bosnia, Singapore, Nairobi, Berlin, Kosovo, Cologne and the back of Paddington railway station in London".